USA – TEXAS Trends and Developments Contributed by: Jeff Homrig, Gaby LaHatte and Heather Blacklaws, Weil, Gotshal & Manges LLP
ment and exemplary damages against the defend - ants following a jury trial. ResMan, LLC v Karya Prop. Mgmt., LLC , 4:19-cv-00402, Dkt. 343 (E.D. Tex. Aug. 12, 2021). And in Wellogix v Accenture, the plaintiff secured more than USD44 million in actual and exem - plary damages, which the Fifth Circuit also affirmed. Wellogix, Inc. v Accenture LLP , 3:08-cv-00119, Dkt. 339 (S.D. Tex. Nov 4, 2011); Wellogix, Inc. v Accenture LLP , 715 F.3d 867 (5th Cir. 2013). Underlying these results is a flexible, fact-specific approach to trade secret damages. The Fifth Circuit has recognised that “[d]amages in misappropriation cases can take several forms: the value of plaintiff’s lost profits; the defendant’s actual profits from the use of the secret; the value that a reasonably pru - dent investor would have paid for the trade secret; the development costs the defendant avoided incurring through misappropriation; and a reasonable royalty”. Wellogix , 715 F.3d at 879 (internal citation and quo - tation omitted). When it comes to exemplary dam - ages, the Fifth Circuit has adopted a similarly flexible approach, looking to both the reprehensibility of the defendant’s conduct and the ratio between punitive and compensatory damages. Id. at 885 (citing BMW of N. Am., Inc. v Gore , 517 U.S. 559, 576-582 (1996)). Even when the reprehensibility factor does not favour enhancement, the Fifth Circuit has demonstrated a willingness to uphold exemplary damages that are less than compensatory damages. See, eg, id. at 886 (upholding an USD18.2 million punitive damages award where the compensatory damages award was USD26.2 million and the reprehensibility factor was neutral). This flexibility in awarding damages, however, is not absolute. Damages awards cannot be speculative and must be appropriately tethered to the defend - ant’s proven misappropriation at trial. A recent Fifth Circuit decision arising from a Texas trade secret case illustrates this principle. In Trinseo Europe GmbH v Kellogg Brown & Root, L.L.C. , the Fifth Circuit affirmed the Southern District of Texas’s decision to vacate a USD75 million jury verdict. 165 F.4th 399, 408 (5th Cir. 2026). There, the plaintiff presented a damages model assuming all ten asserted trade secrets were misap - propriated, without separately valuing the individual trade secrets or offering the jury a way to do so if it
found fewer than all ten were misappropriated. The jury, however, only found four of the ten qualified as trade secrets. Recognising that damages must track the proven misappropriation, the district court vacated the reasonable royalty and unjust enrichment damag - es awarded by the jury. Id. On review, the Fifth Circuit affirmed, reiterating the principle that damages must be tied to the proven misappropriation. Id. at 412- 13. While Texas courts’ flexible damages approaches remain intact, Trinseo serves as a practical reminder to plaintiffs to develop a well-supported damages case tied to the value of their stolen intellectual property, especially when a mixed verdict is possible. TUTSA claims Trade secret plaintiffs also file frequently in Texas state courts. Indeed, Texas state courts hear more trade secret cases than any other state in the country. See CasePortal statistics. Trade secrets are protected in Texas under the Texas Uniform Trade Secrets Act (TUTSA). Tex. Civ Prac. & Rem. Code § 134A.001, et seq. TUTSA provides a broad definition of “trade secret” that is comparable in coverage to the defini - tion under the DTSA: • “Trade secret” means all forms and types of infor - mation, including business, scientific, technical, economic, or engineering information, and any formula, design, prototype, pattern, plan, com - pilation, program device, program, code, device, method, technique, process, procedure, financial data, or list of actual or potential customers or sup - pliers, whether tangible or intangible and whether or how stored, compiled, or memorialized physi - cally, electronically, graphically, photographically, or in writing if: (a) (A) the owner of the trade secret has taken reasonable measures under the circumstances to keep the information secret; and (b) (B) the information derives independent economic value, actual or potential, from not being generally known to, and not being read - ily ascertainable through proper means by, another person who can obtain economic value from the disclosure or use of the information.
Id. § 134A.002 (6).
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